If an individual participates in profits and takes financial risks, they are likely to be what?

The assertion that an individual who participates in profits and takes financial risks is likely to be self-employed is rooted in the fundamental characteristics that define self-employment. Self-employed individuals own their own businesses or work as freelancers, which enables them to earn profits directly from their business activities. Unlike employees who receive a fixed salary and have reduced financial risk as they are generally protected by labor laws, self-employed individuals bear the financial risks associated with their ventures, including the possibility of loss if the business does not succeed.

Self-employed individuals also have the autonomy to make decisions about their business operations and strategies, and their income varies based on the performance of their business instead of being predetermined. This inherently links profit participation directly to their role, as their earnings are tied to the success of their business endeavors.

The other options present scenarios where financial risks and profit participation are not typically characteristic. An employed individual typically receives a steady paycheck with associated benefits and is not directly involved in the business's profits or losses. Unemployed individuals do not participate in any business profit or bear financial risks. Contractors may carry certain elements of self-employment through project-based work but are often akin to employees in the sense they may not take on financial risks in the same manner as full business owners.